As local governments struggle with mounting debt, will private funding step in?

A recent story in the New York Timeshighlighted the pension crisis that is currently afflicting many states and municipalities. The author rightly argues that the pension demands are “crowding out” government’s ability to provide other services.

Part of the problem in states such as Illinois is that the legislatures have their hands tied by constitutional restrictions. The Times story details often alarming ways in which municipalities fail in their ability to provide other services. No one receiving a pension is going to give it up without a fight.

Our political system strains under the worsening problem of low liquidity and crushing debt and liability payments. The fissures, already apparent, will only be made worse by increasing scarcity. Already in the early 19th century, Tocqueville had observed that American democracy would be subverted by the rise of a financial system whose main mechanism of control was debt.

Nothing is more contrary to liberty and independence than debt. The total amount of debt in our economy is over $68 trillion, an alarming increase over the past quarter century. Add to that the trillions of dollars local governments are on the hook for in maintenance liabilities, and you have the seeds of a crisis whose outlines we are only now beginning to see.

One necessary response will be to get private capital and labor off the sidelines and into the game. This will have to occur at the level of homeowners and neighborhoods (things such as sidewalk maintenance and creating and attending common areas) as well as cities themselves.

While private capital will have to address some infrastructure issues (such as changing public roads to toll roads), where it will be most essential is in keeping alive already foundering civic institutions. Schools and basic public services will need help, but civic arts organizations may be the hardest hit of all.

If one wants to employ specious measures such as Maslow’s hierarchy, the arts seem to be the most superfluous contribution to the public weal; and, indeed, it seems foolish to support the opera if people have no way to get there.

Gone are the days when royal families such as the Esterházys, themselves sensitive connoisseurs, materially provided for artists. The patronage system has devolved into a largely uncoordinated complex of public and private funding that leaves nonprofit organizations in a bind as to how to stay in the black. In the US the situation is further complicated by the federalist system which distributes funding tasks among federal, state, and local units of government.

Smaller towns might still get by having local artists form bands or put on exhibits that can be satisfyingly entertaining. In my city of Holland MI, for example, the “Arts Council” runs on private donations, while the city itself budgets no money for the arts. The Holland Symphony consists of local musicians playing ambitious programs in the fine new Arts Center of the local college. It is funded through donations and ticket sales, but is economically driven by the voluntary activities of local residents and musicians. It’s simple tagline - “Enriching the community” - carries the double-meaning of its economic as well as its cultural sense.

As states face deepening economic constraints, they will assuredly target the arts as the place to make cuts. Appropriations to state arts agencies fell by 2.3% from FY2017-FY2018. Per capita funding decreased slightly to $1.08 - the cost of a McDonald’s cheeseburger. 2018 spending of $358 million is down from the $449 million spent in 2001 (the report does not indicate whether this is inflation-adjusted).

The NEA is required to allocate 40% of its funding to state and local arts agencies. The NEA’s FY 2016 budget was $147,949,000, or .0038% of the federal budget. Ever since the controversies of the 1980’s the NEA has largely flown under the political radar, and as a result has been successful in generating matching grants to the tune of $500 million. Still, it is barely relevant with regard to civic arts institutions.

For any arts organization, from the Holland Symphony to The Met, ticket revenues are typically less than 20% of revenues. Small donors, impassioned as they are, make little difference to the fiscal health of the company in terms of actual dollars. These organizations depend on a cocktail of private grants and public funds to keep performing.

The financial solution is pretty simple: use volunteer labor and talent whenever available, and keep the money in the community to the degree possible. Philanthropists in Grand Rapids should not worry themselves about arts organizations in New York, and vice versa. The wonderful thing about stable communities such as Holland is that the citizens are deeply committed to, and thus contributors to, its well-being.

Oliver Messiaen wrote and premiered his “Quartet for the End of Time” in a German prisoner of war camp, played by four of the prisoners. It’s difficult to imagine a less propitious way of producing a masterpiece. When the social landscape gets paved over, new life has a way of springing up in the cracks. Still, it is more prudent to tend to a garden and keep life as verdant as possible rather than hoping for it to spring forth amidst the desolation. "By such a curse as theirs none is so lost/ that the eternal Love cannot return/ as long as hope maintains a thread of green.”